RBI Climate-Related Financial Risk Disclosures finalisation awaited

The RBI's Disclosure Framework on Climate-related Financial Risks for which the draft was issued in February 2024 awaits its finalisation and implementation. It applies to commercial banks, All-India financial institutions, and top/upper-layer NBFCs.

It will have four pillars namely, governance, strategy, risk management, and metrics & targets which are aligned with TCFD recommendations and NGFS guidance. Disclosures cover Scope 1, 2 and 3 emissions and green/sustainable finance portfolios.

The phased road map in the draft was from FY 2025-26 (governance, strategy, risk management) with metrics and targets from FY 2027-28. A separate guidance note on Climate Scenario Analysis and Stress Testing is in development. This is expected to bring climate data into Pillar III-style disclosure and asset-quality assessment.